REHABILITATION PLANTATIONS LTD Vs. P S ANSARY

JUDGEMENT

(1.) The question that arises for a decision in these appeals is whether Section 23 of the Indian Limitation Act, 1963 (for short, "the Act") applies to suits ex-contractu governed by Article 55 of that Act.

(2.) Short facts in O.S. No. 116 of 1994 from which A.S. No. 9 of 1999 arose are: Appellant, a Government Company entered into Ext. Al, agreement with the respondents on 7.8.1990 as per which the latter agreed to purchase 25 metric tons of skim crepe rubber at the rate of Rs. 17.27 per kg. Respondents were to pay the price and remove the skim crepe rubber from the factory of appellant at Kulathoopuzha before 25.8.1990. Respondents were given a grace period of 7 days to remove the goods failing which they were to pay ground rent to the appellant at the rate of Rs. 5/- per metric ton per day. Appellant reserved right to extend the period for taking delivery of the goods charging ground rent as above. In case of default on the part of respondents, appellant could re-sell the goods at the risk of the respondents. Rupees Ten thousand deposited by the respondents towards security in that event, was to be forfeited. Respondents paid the price and took delivery of only 9.5 metric tons within the prescribed time. On 4.10.1990 respondents paid price for another 9.5 metric tons of crepe rubber and removed the same by 10.10.1990. As per letter dated 7.11.1991 appellant directed respondents to remove the remaining 6 metric tons of crepe rubber but they did not comply with that direction. Appellant invited tenders for re-sale of the remaining crepe rubber on 12.12.1991 but only one person submitted tender quoting Rs. 11.04/- per Kg. That tender was not accepted as the price quoted was low and again tenders were invited on 20.2.1992. One person quoted Rs. 13/- per Kg., which was accepted on 24.3.1992 and accordingly the 6 metric tons of crepe rubber was sold. Appellant filed the suit claiming compensation which includes advertisement charges, ground rent from the date of agreement till goods were removed by the subsequent purchaser and the short-fall in the price that occurred in the re-sale. In O.S. No. 69 of 1995 also the same facts are involved with the difference in the relevant dates and that there was no formal agreement executed by the respondents in favour of the appellant. In spite of direction respondents did not deposit the earnest money or execute the formal agreement. In that suit also appellant claimed compensation in the same manner as above. Respondents resisted the suits contending inter alia that the suits are barred by limitation since the same are filed after three years of the date on which breach was allegedly committed by not paying the price and removing the goods on or before the due dates. Learned Sub Judge found that there was breach of contract on the part of respondents but held relying on decision of the Delhi High Court in Bhajan Singh and Co. v. Karson Agency, 1967 AIR(Del) 101(F.B.) that the suits are barred by limitation. Consequently suits were dismissed. Hence these appeals. It is contended by learned Counsel for appellant that even if it is assumed that Article 55 of the Act governed the period of limitation for the suits in question, Section 23 of the Act is available to the appellant and hence period of limitation would run only from the dates of re-sale consequent to the breach committed by the respondents. Learned Counsel relied on the decisions in Eastern Traders (I) Ltd. v. Punjab National Bank, 1966 AIR(P&H) 303 and S.K.A.R.S.M. Ramanathan Chettiar v. National Textile Corporation Ltd.,1985 KerLT 57 Learned Counsel for respondents contend that Section 23 of the Act has no application to the suits ex-contractu and placed reliance on the unreported decision of a Division Bench of this Court in The Rehabilitation Plantations Ltd. v. P.M. Abdul Latheef A.S. No. 852 of 1998 decided on 9.7.2003 to buttress his contention. It is also contended that a suit for compensation for breach of contract is governed by Article 55 of the Act and hence period of limitation would begin to run from the date of breach and not from the date on which the loss was quantified. Reliance is placed on the decisions in. Bhajan Singh Co.'s case , Delta Foundations and Constructions v. Kerala State Construction Corporation Ltd., 2003 1 KerLT 626 and the unreported decision in the Rehabilitation Plantation Ltd.'s case.

(3.) In O.S. No. 69 of 1995 there is a contention that as no formal agreement was executed between the parties there is no concluded contract. Absence of a written agreement is fatal when as per the terms and conditions agreed between the parties a formal agreement is necessary to create a concluded contract. The terms and conditions in this case do not prescribe so. Indisputably tender submitted by the respondents was accepted by the appellant and acceptance was intimated to the respondents. That created a concluded contract.